Planning to buy a car? Top advice here.

I have always been interested in cars and since my stepdad was a mechanic I learned a lot about buying them from him-advice which has proved very useful over the years.

We started with a small runabout then as our family grew we had to buy cars with more and more seats. At our peak when all the children lived at home we had a VW Transporter with 9 seats! Now we have a 7-seater Hyundai Santa Fe for family stuff and I have my beloved Peugeot 206cc which I can zip about in when they are all in school.

madmumof7 in car

Usually I am the one choosing and buying our family cars with my husband's support. He's happy to let me barter for the best deal once we have agreed on what make and model we want. Once a deal has been agree, all that's left is to pay for it!

How to finance buying a car
 Cars don’t tend to come cheap, so if you’re looking to buy a new one, you might be wondering how to finance this purchase. If you’re not careful,  you could end up putting a big hole in your family’s budget. There are a number of ways to approach these purchases, and it’s important that you understand all of your options before you sign on the dotted line. The following guide should help you decide what to do.

If you can, consider using cash or savings
If you’re fortunate enough to be in a position where you can use cash or savings to make the purchase, this could be your best bet. After all, this will mean you don’t have to pay any interest on your purchase, so it could be the cheapest approach. However, it may be a mistake to use all of your savings to get a new car. If you can, it’s wise to leave some money in savings to cover emergencies.

peugeot 206 cc

Look into personal loans
Personal loans can be an effective alternative if you don’t have enough money saved up to buy. These agreements with finance providers, banks or building societies can be a cost-effective way to get the car you want. They enable you to borrow a set amount of money over a defined period of time. You simply make specified monthly repayments for the duration of your loan. Lenders such as Chill Money offer repayment terms of up to five years.

There are a range of benefits associated with personal loans. For example, with competitive interest rates available, they can be cheaper than other types of financial agreement. Also, it’s now simple to apply for these loans. As well as the traditional approach of meeting with lenders face-to-face, you can complete applications over the internet.

Get a finance agreement through a car dealer
Alternatively, you may prefer to arrange finance directly through a car dealer or manufacturer. For example, hire purchase agreements give you the option of taking out a loan secured against your vehicle. Bear in mind that while these deals can be competitive if you’re getting a new car, the interest rates tend to be less attractive for second-hand vehicles. Also, you won’t own the car until you’ve made the last repayment.

Personal contract plans are also available. A variation on hire purchase, they tend to offer lower monthly payments, so might be appealing if you’re operating on a tight budget. One drawback however is that when you come to the end of your agreement, you won’t yet own the car. At this point, you can either give it back to the dealer, pay the outstanding balance and keep it or trade it in and start a new personal contract plan on a different car. If you opt for one of these deals, you might incur extra costs if you exceed your agreed mileage limit.

Alternatively, perhaps personal leasing agreements appeal to you. With these arrangements, you pay a car dealer a fixed monthly sum to use a car. Maintenance and servicing costs are included in your ongoing repayments as long as you stick within your agreed mileage limit. At the end of your deal, you simply hand the car back. These arrangements can be attractive if you want to have fixed monthly driving costs, but they’re not a good solution if you want the option of eventually owning a car.   

Whether you go for a hire purchase agreement, a personal contract plan or a personal leasing deal, don’t accept the first offer made to you. These arrangements are almost always negotiable, and with a bit of haggling, you may be able to secure yourself a better deal.

Buying a car can have a big impact on your household finances, so it’s worth researching your options carefully before you come to a decision. Then you can hit the open road in your lovely new car!

the open road in snow

Disclaimer: Post written in collaboration with Chill Money.